The Mackinac Center for Public Policy has been studying cigarette smuggling rates since 2008. Our research, and that of other scholars and organizations, suggests that cigarette smuggling is a real problem in the United States. Policymakers should keep this in mind when considering how much to tax cigarettes.

Lawmakers often think that raising cigarette taxes are a “win-win” — generating more revenue for state government and improving public health by making it harder to legally purchase cigarettes. Studies suggest, however, that states with high excise taxes are more likely to have high cigarette smuggling rates, as the tax disparities among the states provide an opportunity to earn easy profits. Illegal smuggling deprives governments of tax revenue and encourages more people to participate in illicit, and often dangerous, markets.

Below is an interactive map which displays our most recent estimates of smuggling rates in 47 of the 48 contiguous states. A detailed description of the methodology used to create these estimates can be found in the studies that are also below.

Estimated Cigarette Tax Avoidance and Evasion by State, 2015

Michigan

Smuggling Rate

23.03%12th in the U.S.

State Tax

200cents per pack

Smuggled Packs

132,000,0005th in the U.S.

Revenue Impact

-$264,000,0006th in the U.S.

North Carolina is excluded from our estimate because it is the source state for our “commercial smuggling” calculations. Hawaii and Alaska were excluded due to the challenges of modeling states that are noncontiguous.

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As cash-strapped government looks to cigarettes for tax revenue, the public responds by more illegally transporting smokes across state borders. Smugglers and thieves target stores and businesses and the benefits to state coiffures and public health are questionable.

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